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The beta of four stocks-P, Q, R, and S-are 0.59,0.78,1.14, and 1.39, respectively and the beta of portfolio 1 is 0.98, the beta of portfolio
The beta of four stocks-P, Q, R, and S-are 0.59,0.78,1.14, and 1.39, respectively and the beta of portfolio 1 is 0.98, the beta of portfolio 2 is 0.86, and the beta of portfolio 3 is 1.09. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 4.5% (risk-free rate) and a market premium of 1 1.5% (slope of the line)? What is the expected return of stock P? What is the expected return of stock Q? What is the expected retum of portfiolio 17
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